Most of the lore on "fae" creatures is a remnant of the old days of Arena and Daggerfall when TES didn't quite have its own identity yet and was heavily inspired by other fantasy of the time, namely Dungeons & Dragons. It is safe to say that any remaining mentions of fae are just like the ones we have in real life: folk tales and stories conjured up by superstitious peasants. Either that, or they are legends of creatures that once existed but were displaced and wiped out by the arrival and spread of the Tamrielic races, which is what some sources claim happened to the "fae" on Summerset.